May 8, 2024: The Karnataka High Court has struck down a 2008 decision of the Central government to extend Employees Provident Fund (EPF) Scheme and Employees Pension (EP) Scheme to international workers in India.
The judgment pertains to the specific provisions for International Workers outlined in Paragraph 83 of the Employees’ Provident Fund Scheme, 1952 and Paragraph 43A of the Employees’ Pension Scheme, 1995, which were termed inconsistent with Article 14 of the Constitution by the HC.
“The EPF & MP Act was enacted with a view to see that those in lower salary brackets get retirement benefits and by no stretch of imagination, could it be said that the employees who draw lakhs of rupees per month should be given the benefit under the enactment,” the HC said, referring to foreign workers, in its order dated April 25, 2024.
The aims and objects of introducing para 83 of the EPF Scheme as could be seen is, to protect the Indian employees going abroad to work from being subjected to the social security and the retirement clause of their post country which are prejudicial to their interest and to motivate these countries for entering into such agreements with India, and to make it happen is to provide for reciprocal treatment to the nationals of these countries while they work in India.
Para 83 of the EPF Scheme is in the nature of subordinate legislation and therefore, the subordinate legislation cannot travel beyond the scope of the mother Act. Keeping in view the aims and objects of the main EPF & MP Act, when a ceiling amount of Rs 15,000 per month has been placed as a threshold for an employee to be a member to the scheme, Para 83 of the EPF Scheme ought not to have an unlimited threshold for international workers while denying the same benefit to Indian workers. There being no commonality of interest of the aims and objectives of EPF & MP Act, 1952 and para 83 of EPF Scheme, Para 43A of EP Scheme to be struck down as incompatible, arbitrary, unconstitutional and ultra vires,” it said.
EPFO will ‘actively’ evaluate response to the judgment
The Employees’ Provident Fund Organisation (EPFO) has said that it acknowledges the HC ruling and it is actively evaluating the course of action in response to this judgement.
India presently has social security agreements with 21 countries. These agreements ensure continued social security coverage for employees from these nations on a mutually reciprocal basis. When citizens from these countries take up employment in each other’s territories, their social security coverage remains uninterrupted.
These agreements aim to guarantee the uninterrupted social security coverage of employees during international employment. These agreements are very important for India for promoting international mobility and leverage the demographic dividend. The EPFO serves as the operational agency in India for such social security agreements.
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